Earlier this year, the Government and the credit industry introduced a wide range of measures to help people with the financial impact of Covid-19. As this support is gradually reduced, are you ready to go back to normal?
What is a Covid-19 payment holiday?
A payment holiday is a temporary break in payments agreed with your mortgage or credit-card lender. Consumers have always been able to ask for these but, with the current pandemic, the consumer credit industry has needed to offer a more generalised approach than usual. So, if you’ve been financially affected by Covid-19, you could ask your lender for a three-month payment freeze or a partial-payment freeze to help you. This has been extended until 31 October for most credit agreements and you can ask for a further break if you’ve already had help.
Should I apply?
Think carefully before you apply – once the payment holiday ends you will need to repay the amount you’ve missed, together with interest and your full contractual monthly payment. This may mean that the 'new' payments are unaffordable.
My payment holiday has ended – what should I do?
Your lender will contact you to let you know that your payment holiday is coming to an end. You can apply for a further holiday, although your lender may not agree to it. If you're considering applying for a payment holiday or extending your current arrangement, think very carefully about the longer term. If you haven’t been affected financially by Covid-19, you should continue making your regular payments if possible. If you have been affected, you should think about whether this situation is likely to be temporary. If you're potentially facing difficulties in the longer term, you should look at other options and seek money advice as soon as possible.
Our Money Advice Team can help you look at your options and discuss the best way forward for you. We’ve also put together a webinar which looks at the different types of agreement and what help is available. It’s a great starting point if you’re not sure what to do – take a look at our webinar.